While the speculative market for subdivided rural land is “dead as a doornail,” premium property is rapidly selling to those who can afford it, said Clark Wheeler, a real-estate appraiser with Norman C. Wheeler and Associates in Bozeman and author of an annual Montana land valuation study released this week.

Large tracts of rural land in Montana sold for about 47 percent more in 2007 than the previous year, but the increase is because of rising demand for land filled with amenities like forests and water access rather than a function of land appreciation, according to the study.

“The main thing we're seeing this year, is what's selling are the better properties,” Wheeler said Wednesday. “The reality is wealthy people continue to buy property and there's a lot of wealthy people that want to move to Montana.”

The average value of large ranch transactions in Montana has increased from about $4.2 million in 2006 to $8 million in 2007, according to Wheeler's study. That's much higher than the previous peak year in 2005 when ranch transactions ran as high as $5.5 million.

Randy Carpenter, a land use planner for the nonprofit Sonoran Institute's Bozeman office, said Wheeler's study shows that the rural land market in Gallatin County is driven by buyers who are looking for large properties in an open landscape.

 Buyers will only pay top dollar for properties when there's predictability that the surrounding landscape will not be carpeted by subdivisions, Carpenter said.

The report offers more evidence that Gallatin County's proposal for countywide zoning would enhance rural land values, Carpenter said. The zoning would guide growth to existing towns and limit the paving over of the countryside.

 The county's proposal would create zoning in all un-zoned and unincorporated areas. Opponents of the plan say it's not government's job to tell people what they can or cannot do with their land, and any zoning in a community should come from the people who live there, not government.

According to Wheeler's study, the amount of acres sold in 2007 -- in land transactions larger than 300 deeded acres -- remained generally consistent with 2006. But 2007's amount was still about half of the amount sold in 2005, when sales peaked, the study said.

Some owners of lots in speculative rural markets figure it will be three years before falling values turn around, Wheeler said. In Broadwater County and fringe areas of Gallatin County, values have fallen 30 percent to 45 percent over the past two to three years, the study found.

A typical example of a speculative market that has faltered is the Wheat Montana area in southern Broadwater County, where divided land lacks water or trees, Wheeler said.

Properties that often have extensive buildings are part of what's selling, he said. For example, trophy ranches rather than operational ranches.

Agricultural land values between 1998 and 2007 have appreciated about 14 percent, Wheeler said.

One reflection of the type of properties selling is the percent of building contribution to sales. In 2006, buildings added about $68 per acre to the average land value, according to Wheeler's study. In 2007, buildings added an additional $207 per acre, an increase of more than 200 percent.

The market continues to bless those with rare and high quality properties, Wheeler said. But as in the housing market, the owners of average properties will be sitting on the sidelines as the market re-corrects.

Wheeler's full study will be available the first week of February online at www.ncwheeler.com.